IBR Loan Forgiveness: 2025 Updates & How to Qualify

The Education Department has restarted income-driven loan forgiveness after months of delay—this time under court supervision.

Discharges under IBR have already resumed, and forgiveness under ICR and PAYEPay As You Earn (PAYE)A federal income-driven repayment plan that caps monthly payments at 10% of discretionary income and forgives remaining debt after 20 years. It is only available to borrowers who took out their first federal loans on or after October 1, 2007. will follow once the court approves the deal.

Borrowers who reach forgiveness this year will be protected from federal taxes, and the Department must file monthly progress reports to the court.

Why IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. Forgiveness Stalled in 2025

The Education Department said it paused IBR forgiveness in mid-2025 to rebuild systems after the SAVESAVE Plan (SAVE)The Saving on a Valuable Education Plan, a federal income-driven repayment plan introduced in 2023 to replace REPAYE. Its implementation has been subject to ongoing litigation, and enrolled borrowers have faced court-ordered forbearance periods. injunction, but that “fix” lasted months longer than expected. In October, the Department and the American Federation of Teachers reached a joint agreement confirming that forgiveness under IBR, ICRIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation., and PAYE must continue.

The One Big Beautiful Bill Act had already removed the “partial financial hardshipPartial Financial HardshipA federal eligibility standard used historically for IBR and PAYE, where a borrower qualifies if their calculated IDR payment is lower than the payment they would owe under a 10-year Standard Repayment Plan.” rule for the Income-Based Repayment Plan, but the Department’s systems hadn’t caught up. Under the agreement, new IBR applications from higher-income borrowers won’t be denied outright—they’ll be placed “in abeyance,” meaning the Department will hold them until its systems are updated to process them correctly. The agency must also file monthly public reports on its progress once the court signs off.

For borrowers, that means the long-stalled discharges are finally back on track—this time under direct court supervision.

Do You Qualify for IBR Forgiveness?

You may qualify for IBR forgiveness if your loans are owned by the Education Department, you’ve made the required 20 or 25 years of payments, and you’re in—or eligible to enter—the IBR plan when forgiveness is processed.

Do my loans qualify?

• Loans owned by the Education Department: These include Direct Loans and any FFEL loans that EDU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans. has purchased. They qualify for IBR forgiveness and are automatically credited under the one-time IDR adjustment.
• Privately held federal loans: These are FFEL loans still owned by private lenders. They didn’t receive the IDRIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. adjustment unless consolidated by June 30, 2024. If you consolidate them now, you’ll restart your forgiveness clock.
• Parent PLUS borrowers: The One Big Beautiful Bill Act removed the “ICR-only” restriction. Parent PLUS borrowers who’ve consolidated can now use IBR instead of relying on the old double-consolidation workaround.
• Borrowers previously denied for IBR: If you were told you made “too much” to qualify, that’s changed. The partial financial hardship rule was repealed by Congress on July 4, 2025. Under the new court agreement, applications that were denied—or new ones filed now—will be held for processing until the Department updates its systems to process them correctly.
• Borrowers in other IDR plans: Under the AFT agreement, forgiveness will resume not just for IBR, but also for ICR and PAYE borrowers who’ve reached their 20- or 25-year mark.

If You’re at 300 Payments or More

The next steps depend on whether you’ve already received an approval notice or are still waiting to be processed.

If You Got the Email from the Education Department

That notice confirms you’ve crossed the forgiveness threshold and are now in line for discharge. Under the new AFT agreement, the date you reached eligibility—your 240th or 300th qualifying paymentQualifying PaymentA monthly loan payment that counts toward federal forgiveness programs like PSLF or IDR forgiveness. Whether a payment qualifies depends on the loan type, the repayment plan, and the borrower's employment at the time of payment.—counts as your official discharge date, even if the Department finalizes it later.

Borrowers with 300 or more qualifying payments are now receiving IBR discharge approval emails from the U.S. Department of Education.

Borrowers who made payments after reaching that milestone will be reimbursed once their loans are cancelled. The Department also agreed not to issue IRS Form 1099-C for anyone whose effective discharge date falls in 2025, protecting those borrowers from federal taxes.

If You Haven’t Gotten the Email Yet

If you believe you qualify but haven’t heard anything, use the back-door tracker to confirm your qualifying payment count. “Null” or missing numbers often indicate incomplete data transfers from older servicers. Take screenshots and report any errors to your servicer.

Borrowers reported “null” payment counts in the Department of Education’s IBR tracker after system updates — a glitch that delayed forgiveness processing in 2025.

Processing is expected to continue in monthly batches, which the Department must now publicly report to the court. If your loans still aren’t reflected after the next update, escalate by contacting the FSAFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers. Ombudsman or your Member of Congress.

If You’re Not at 300 Yet

Your path to forgiveness still depends on who owns your loans and which plan you’re in—but the new AFT agreement changes how certain borrowers can move forward.

If Your Loans Are Owned by the Education Department

Keep making payments under your current plan if you’re in IBR, ICR, or PAYE—those payments still count toward forgiveness. The Education Department will continue processing discharges for all three plans under court supervision.

If you’re in the SAVE plan, your account is still in administrative forbearance because of the ongoing injunction. Those months don’t count. But if you’ve already reached your 20- or 25-year forgiveness mark, you can switch to IBR, ICR, or PAYE by December 31, 2025, and your eligibility date will still count as 2025 for tax purposes—even if the discharge posts later.

If Your Loans Are Privately Held Federal Loans

These are FFEL Program loans still owned by private lenders, often serviced by companies like American Education Services (AES) or MOHELAMOHELAThe Missouri Higher Education Loan Authority, a federal student loan servicer that currently handles accounts for borrowers in Public Service Loan Forgiveness and other federal loan portfolios./Navient. The one-time IDR adjustment didn’t apply to them unless you consolidated before June 30, 2024. If you consolidate now, you’ll restart your clock toward forgiveness.

Only payments made under the FFEL-IBR plan count. Payments under standard, graduated, or extended plans—or months in deferment or forbearance—don’t.

Before the Door Closes in 2028

Under the One Big Beautiful Bill Act, IBR, ICR, and PAYE remain available until June 30, 2028. After that, all new borrowers will enter the new Repayment Assistance Plan (RAP), which extends forgiveness to 30 years but offers new interest benefits.

If you’re still building toward forgiveness, staying enrolled in a qualifying IDR plan—and doing it before that 2028 cutoff—remains critical.

Related: What Happens to IBR and SAVE Borrowers When RAP Starts

What if Your IBR Forgiveness Credit Is Wrong?

The Department still hasn’t created a formal reconsideration process, but the AFT agreement requires its first public status report to explain how it identifies borrowers eligible for discharge and how payment counts are calculated. That transparency should help borrowers spot and document mistakes more effectively.

Learn More: How to Fix Your IBR Loan Forgiveness Payment Count

Will I Owe Taxes on IBR Forgiveness?

The American Rescue Plan Act makes student-loan forgiveness tax-free through December 31, 2025. Under the new AFT agreement, if you reach eligibility for forgiveness in 2025, that date will count as your official discharge date—even if the Department finalizes it in 2026.

The Education Department also agreed not to issue IRS Form 1099-C for those borrowers, shielding them from federal taxes on their cancelled balance.

After 2025, unless Congress extends the tax break, forgiven balances may again be treated as taxable income.

Learn More:

• Will I Owe Taxes on IBR Loan Forgiveness After 2025?
• How the Insolvency Exclusion Works for Student Loans